Broadcasters Want Dish To Pay More For AutoHop

As questions persist about the fate of Dish Network’s automatic ad-skipping technology, there is at least one certainty: money talks. CBS CEO Leslie Moonves has said unless Dish abandons the
Hopper DVR, he won’t allow the satellite operator to carry CBS content. But he has also suggested that he would drop that push if Dish paid CBS $5 a month per subscriber.

Station groups
seem to have the same idea. In court papers, Dish says that affiliate groups have sought an added fee in carriage negotiations "specifically for each customer’s use of AutoHop." (That's the
Hopper function that eliminates all ads in a recording.)

“Specific numbers were even proposed,” the satellite operator says. One court document has a sizable redacted list of
proposed fees.

But Dish says it was able to make the deals without the added payments.

Before an agreement was reached last year, an executive at the Sinclair group indicated to the
Los Angeles Times that Dish should pay more to offer the AutoHop.

Stations have also pursued Moonves’ initial suggestion: telling Dish to disable the Hopper or go without their
programming.

In another court filing, David Shull, a Dish senior vice president, says during carriage negotiations several affiliate groups have asked that Dish subscribers be
“prohibited” from using the DVR.

Dish has said no way, Shull says.

Last year, during a standoff with Hoak Media, Dish told the Los Angeles Times before a deal was
reached that the station group was demanding that AutoHop be disallowed.

(The broadcast networks are in litigation with Dish, seeking to rid the earth of the AutoHop and other Hopper
features.)

This isn’t to say that station groups have not been getting anything for their AutoHop-oriented demands. Even if not successful discretely, their requests could have provided
leverage to wrangle substantial price increases out of Dish.

Speaking of leverage, there have been suggestions that Dish launched the AutoHop to gain some to drive down its carriage payments.
But Chairman Charlie Ergen said this week at an AllThingsD event that “it’s not a leverage game, it’s really that technology has changed.”

Dish is competing with
DirecTV, cable and telco TV operators, which offer DVRs, and the Internet, which might offer commercial-free programming, so he indicated that it needs the AutoHop to gain an edge.

He also
suggested that the networks are backward-thinking when it comes to advertising and the Hopper actually offers them an opportunity to generate higher revenues. The device has the ability to serve
targeted ads to viewers based on perceived interests, which could have advertisers paying a premium, he said.

The trouble is that under that scenario, the AutoHop could lose some of its
customer appeal because programming would no longer be commercial-free TV.

“It makes sense then to give people more targeted ads that are more meaningful to them, which means you could
run less commercials and … you actually could make more money on that revenue stream,” Ergen said, adding the “broadcast industry is slow to adapt to that.”

The
promise of addressable advertising on a national level has been around for a long time. On paper, it sounds ideal and it's nice to theorize about at a conference. But Ergen may be overlooking that
it’s nowhere near as easy as skipping commercials with the AutoHop.

Hey Leslie,
I hate to break it to you, but I have ad skipping on my Verizon Fios DVR. If Verizon sends me a note that they're bumping my monthly subscription to pay you an extra $5, I'm cutting the cord. I really need to catch up on my YouTube videos anyway...and I haven't even started watching the Netflix series yet. There's just too much content out there to bother with commercials anymore. Welcome to 2013.